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CRISIL Revised India’s GDP for FY21 to -7.7% against -9% Predicted in September 2020

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On December 14, 2020, Rating agency CRISIL (Credit Rating Information Services of India Limited) projected a slower contraction of 7.7% (-7.7%) for India’s real gross domestic product (GDP) in FY21 as compared to the -9% forecast in September 2020.

  • The key reason behind this upward revision is faster-than-expected recovery in the Q2FY21 (July-September 2020)
  • For FY22, CRISIL projected a GDP growth of 10% due to weak base and global ‘rising tide’ effect.
  • There will be a permanent loss of 12% in real GDP terms due to COVID-19 pandemic.
  • Inadequate fiscal spending remains a constraint for economic growth.

Key Points:

–The GDP contracted by 23.9%(-23.9%) in Q1FY21 (April-June 2020) period as compared to the year-ago period, with contraction slowing down to 7.5% in Q2FY21.

–RBI also revised up its estimate to 7.5% contraction(-7.5%) from 9.5%(-9.5%) GDP contraction in FY21.

— Brickworks Ratings also revised upwards its estimate on GDP to a contraction between 7-7.5%.(-7 to -7.5%)

Recent Related News:

i.In accordance with the latest revision by Goldman Sachs, India’s growth forecast for FY21 is upgraded to 10.3% contraction (-10.3%) from -14.8%.On the other hand, it downgraded India’s Gross Domestic Product (GDP) to 13% in FY22 as compared to 15.7%.

ii.On October 13, 2020, International Monetary Fund (IMF) in its latest World Economic Outlook (WEO-October 2020), titled “A Long and Difficult Ascent” projected India’s gross domestic product (GDP) to contract 10.3% (i.e.-10.3%) in comparison to June forecast of 4.5% amid COVID19.

About CRISIL:

Managing Director (MD) & Chief Executive Officer(CEO)– Ashu Suyash
Headquarter– Mumbai, Maharashtra
Parent Company– Standard & Poor’s (S&P)